Controversial proposals missing from final CMS rules for Medicare contractors

The CMS Friday finalized minor changes (PDF) to the Medicare Advantage and Medicare prescription drug programs while omitting an any-willing-pharmacy proposal, among others it had proposed early in the rulemaking process.

Among the changes in the final rule are equirements for contractors to have plans in place to deal with natural disasters and new audit requirements for organizations that run afoul of federal regulations.

The final rule addresses changes that were initially proposed in January of 2014. The CMS received more than 7,000 comments on that initial proposal. The federal agency finalized some of those regulations last May.

Last March, however, the CMS backed away from several controversial changes, which stayed out of Friday's final rule as well. In particular, there was no mention of the proposal that would have required plans to include in their networks any pharmacy that agrees to accept their terms.

In addition, the CMS said it will not remove the “protected status” of antidepressant, antipsychotic and immunosuppressant drugs. Drugs with protected status must be included on all Part D formularies. But several consumer groups such as Mental Health America criticized the proposal, saying it would hurt Medicare beneficiaries who need access to those drugs.

It wasn't immediately clear if those and other contentious provisions could still resurface at a later date.

“While we are finalizing in whole or in part approximately 30 of the provisions from the proposed rule in this final rule, there remain a small number of provisions from the proposed rule that were not finalized in the May 2014 final rule and that we are not finalizing in this rule,” reads the guidance issued Friday.

The pared-back regulations may be an indication that the CMS still wants to exert more oversight on Medicare Advantage and Part D plans in the future. “I do believe additional rules are likely to come out to raise the bar even higher,” said Lisa Han, a healthcare partner at the law firm Jones Day.

The final rule was released ahead of much-anticipated guidance from the CMS on preliminary 2016 payment rates for Medicare Advantage, which are due Feb. 20. In recent years, the release has kicked off an aggressive lobbying campaign by the insurance industry to stave off proposed cuts to the private Medicare program, which now accounts for roughly 30% of all Medicare beneficiaries.

The CMS finalized a requirement that Medicare Advantage and prescription drug plans have strategies in place to deal with natural disasters, such as hurricanes or tornadoes. However, the agency loosened the rule so that contractors would be expected to have services operational within 72 hours instead of the previously proposed 24 hours.

“After Hurricane Sandy it became apparent that a few entities, particularly those with operational centers and/or information technology resources physically located in the affected areas, did not have consistent continuity plans or back-up systems and processes to ensure ongoing coordinated deployment of critical staff to alternate locations,” reads the final rule.

The agency also said in the rule it can require insurers and pharmacy benefit managers to hire independent auditors if they want to challenge Medicare audit findings. The CMS has increased its oversight of Part C and Part D regulation through corrections audits, which have led to several fines over the past few years. But critics contend that at least some of the fines may be too small to fix systemic problems.